“We originally approved this legislation because it would help Michigan families save money when purchasing a new vehicle,” said Schuitmaker, R-Lawton. “The governor vetoed these bills because of financial concerns and the administration and the Legislature were never able to come to a final agreement beyond that — which is why we saw today’s action.”

With approval from both the Senate and the House, the override eliminates the governor’s veto and speeds up the implementation of what has been coined “sales tax on the difference.”

As passed, SBs 94 and 95 increase the dollar amount that is excluded from taxation when a motor vehicle is traded in for a new or used vehicle. The bills increase the cap on the trade-in value from $3,500 to $4,000 beginning Jan. 1, 2018 and to $5,000 by Jan. 1, 2019. The cap then increases by $1,000 annually until the reforms are fully implemented in 2028.

For example, once fully implemented, if a car valued at $14,000 is traded in and the owner applies the trade-in value toward the purchase of a $24,000 car, the sales tax would only be applied to the $10,000 difference.

“Michigan is one of only six states — and the only Great Lakes state — that still taxes the value of trade-ins,” Schuitmaker said. “The current system goes against everything we have represented and fought for over the last eight years. This policy costs Michigan consumers more money and puts businesses at a disadvantage — it is clear that change is needed.”

Schuitmaker added that though she doesn’t take choosing to override an administrative veto lightly, it was an action she was proud to be a part of.

“Today’s action by the Senate is a full representation of our system of checks and balances,” Schuitmaker said. “I was proud to support this effort on behalf of Michigan’s taxpayers.”

The House also approved the measure Wednesday afternoon, formally completing the override process.